Baker Goodchild this week warned Royal Mail that its ‘mixed messages’ risk alienating its customer base. Last week the recently privatised parcel and letter delivery firm posted record profits and announced growth in parcel delivery division whilst also warning that the competition threatens its universal service obligation.
MD Lorraine Burnell for the Birmingham-based Direct Mail specialist said this week that these announcements were sending mixed messages to Royal Mail’s customers – both domestic and commercial.
The first announcement from Royal Mail concerned extended parcel delivery services. Royal Mail is to trial a Sunday delivery service for parcels in response to the increasing demand for goods ordered online, opening around 100 offices on a Sunday afternoon for customers to pick up their parcels. Royal Mail’s express delivery service, Parcelforce Worldwide, which tends to deal with larger and more valuable parcels, will also offer a Sunday service to retailers from June. It will be up to the retailer to decide whether to offer it to customers. “Through these new Sunday services we are exploring ways to improve our flexibility and provide more options for people to receive items they have ordered online,” said Royal Mail’s chief executive Moya Greene.
The following day Royal Mail declared its first operating figures since privatisation. Operating profits for the 52 weeks to the end of March jumped to £403m, up from £152m for the previous year. Its core UK parcels and letters unit reported an operating profit of £294m, compared with just £33m last year. Revenues from UK parcel deliveries were up 13%, and parcels now account for 48% of revenue across the group. On a like-for-like basis, the volume of parcels sent rose by 5% over the year. The rise in parcel deliveries is in marked contrast to a sharp fall in UK letter deliveries, which fell by 8%. Despite the fall, revenues rose by 3% due to the increase in stamp prices.
Just 24 hours later, Royal Mail warned that its universal service obligation was under threat due to increased competition, complaining to the postal regulator, Ofcom, and demanding “immediate action” to protect the service obligation.
Speaking this week MD Lorraine Burnell said “Royal Mail’s profits and upbeat assessment of the year to come are very welcome but it seems to want things both ways: benefiting from the expansion in parcel delivery volumes whilst trying to ring fence letter delivery from competition. Whilst protection of the universal service obligation is important, competition has been incredibly healthy. It has not only allowed organisations to reduce postage costs but also forced Royal Mail into cutting costs and improving service.”
Baker Goodchild sources all providers to offer low cost bulk mail delivery for its client base. Lorraine continued “We monitor the market on an hourly basis and understand that increased competition has helped many companies to reduce costs, even during difficult trading conditions.”